Former top Diocese of Manchester official under investigation for ‘improper financial transactions’

A priest who was the public face of the Diocese of Manchester during a damaging sex abuse scandal is being investigated for “improper financial transactions” involving church funds, the diocese said yesterday.

Monsignor Edward Arsenault, who was a senior official of the Roman Catholic Church in New Hampshire from 1999 to 2009, is being investigated by both the diocese and the attorney general’s office after a church review “discovered evidence suggesting improper financial transactions by Msgr. Arsenault involving diocesan funds,” the diocese said in a news release.

Senior Assistant Attorney General Jane Young said church officials approached the attorney general’s office about two weeks ago, and a criminal investigation is under way.

She said the office is working with investigators from the state police and the FBI but declined to comment on any possible charges.

“I am committed to reviewing our internal diocesan operations to ensure that any issues are identified and corrected, as necessary. We will do this in the light of day. In the meantime, we will be cooperating fully with the attorney general’s investigation,” said Manchester Bishop Peter Libasci in a statement.

Since 2009, Arsenault has been president and chief executive officer of St. Luke Institute, a mental health treatment center for priests and others based in Maryland. He resigned Friday because of the investigations in New Hampshire, the institute said yesterday in a news release.

“This is very difficult news, and we are keeping this situation in prayer,” said Sheila Harron, the institute’s interim CEO.

An attempt yesterday to contact Arsenault through St. Luke Institute was not successful. A St. Luke spokeswoman said she didn’t know the name of Arsenault’s attorney.

The Manchester diocese said financial irregularities were discovered after the church earlier this year “received allegations regarding a potentially inappropriate adult relationship involving” Arsenault. The diocese informed the attorney general’s office “because the diocese was concerned that illegal acts may have been committed,” it said.

Arsenault was also a board member at Catholic Medical Center in Manchester, and in 2009 signed a consulting contract with the hospital that ended in 2010.

The hospital announced yesterday it was seeking “a thorough review” of that contract by the attorney general’s office “given the serious allegations” against Arsenault.

“We do not know whether this contract will have any bearing on the current investigation, but in the interest of openness and transparency, we have asked for this review,” the hospital said in a release.

CMC, the diocese and the attorney general’s office declined to provide any additional details.

In 2002, the church and the state reached an agreement that shielded the Manchester diocese from criminal charges related to four decades of protecting and transferring sexually abusive priests. In return, the diocese acknowledged wrongdoing, implemented new reporting and training programs and agreed to annual audits.

At the time, Arsenault was then-Bishop John McCormack’s assistant in charge of handling sexual abuse complaints. He played a high-profile role in subsequent years as initial audits criticized church leaders for a lack of progress – for example, the 2006 audit faulted them for failing to make sure priests, staff and volunteers who worked with children went through criminal background checks and anti-abuse training.

The 2007 audit criticized Arsenault specifically for “a lack of detailed information and candor.” Arsenault said the auditors misconstrued his attitude in an interview, and the 2008 audit credited the diocese for showing a greater willingness to work with law enforcement officials.

(Ben Leubsdorf can be reached at 369-3307 or bleubsdorf@cmonitor.com or on Twitter @BenLeubsdorf.)

Re: "Arsenault said the auditors misconstrued his attitude in an interview..."
In the interest of accuracy, this is what happened, from something I wrote at the time:
"The reality betrayed by diocesan spin is evident in additional information about the interview state auditors had with Arsenault, the one that ended tensely after 15 instead of 90 minutes.
The truth is that Arsenault engaged in a charade in which he forced the lead auditor to repeat a question from a second auditor that everyone had just heard clearly because only the lead auditor was allowed to speak to Arsenault directly.
It played out like this: In questioning Arsenault, the lead auditor asked a colleague who had actually done the field work visiting parishes and examining documentation if he had a follow-up question. He did and Arsenault answered. Then the colleague had a logical follow-up himself, but Arsenault refused to answer, indicating the colleague had to ask anything through the lead auditor.
So, the colleague repeated the question to the lead auditor, who in turn repeated the question to Arsenault. It happened again, and finally, Arsenault was asked if that would be the case for every question. Yes, he said, whereupon the auditors replied, forget it, this is over, we're done."